The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Hanmi Financial Corp (NASDAQ:HAFC) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Hedge fund interest in Hanmi Financial Corp (NASDAQ:HAFC) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that HAFC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare HAFC to other stocks including CNB Financial Corporation (NASDAQ:CCNE), Aspen Group Inc. (NASDAQ:ASPU), and AXT Inc (NASDAQ:AXTI) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Minhua Zhang of Weld Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the recent hedge fund action encompassing Hanmi Financial Corp (NASDAQ:HAFC).
Do Hedge Funds Think HAFC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in HAFC over the last 21 quarters. With hedge funds’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Hanmi Financial Corp (NASDAQ:HAFC) was held by Renaissance Technologies, which reported holding $6.1 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $3 million position. Other investors bullish on the company included D E Shaw, AQR Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Weld Capital Management allocated the biggest weight to Hanmi Financial Corp (NASDAQ:HAFC), around 0.09% of its 13F portfolio. Tudor Investment Corp is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to HAFC.
Since Hanmi Financial Corp (NASDAQ:HAFC) has experienced a decline in interest from hedge fund managers, logic holds that there were a few fund managers that decided to sell off their full holdings in the third quarter. Intriguingly, David Harding’s Winton Capital Management said goodbye to the biggest position of the 750 funds tracked by Insider Monkey, valued at an estimated $0.5 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund dumped about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Hanmi Financial Corp (NASDAQ:HAFC). These stocks are CNB Financial Corporation (NASDAQ:CCNE), Aspen Group Inc. (NASDAQ:ASPU), AXT Inc (NASDAQ:AXTI), Northern Oil & Gas, Inc. (NYSE:NOG), Enterprise Bancorp, Inc (NASDAQ:EBTC), Retail Value Inc. (NYSE:RVI), and Chiasma Inc (NASDAQ:CHMA). This group of stocks’ market values resemble HAFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCNE | 8 | 10648 | 2 |
| ASPU | 9 | 33426 | -1 |
| AXTI | 8 | 15855 | -4 |
| NOG | 12 | 29194 | -10 |
| EBTC | 2 | 955 | 1 |
| RVI | 15 | 75281 | -1 |
| CHMA | 15 | 63581 | 1 |
| Average | 9.9 | 32706 | -1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $14 million in HAFC’s case. Retail Value Inc. (NYSE:RVI) is the most popular stock in this table. On the other hand Enterprise Bancorp, Inc (NASDAQ:EBTC) is the least popular one with only 2 bullish hedge fund positions. Hanmi Financial Corp (NASDAQ:HAFC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for HAFC is 66. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on HAFC as the stock returned 36.5% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
